“Of course, I support our chief minister’s decision to withdraw from the centre on FDI. I think everybody should protest against it. People from all walks of life should contribute in their own way in standing up against it,” Mahasweta Devi said while launching a book “FDI-Gobhir Shorjontror Shikar Aamra” (FDI-We are a target of conspiracy).

The rage in Parliament is off target. Walmart’s disclosure of its lobbying fee in the US Senate should trigger a different debate in India, says Shaili Chopra

December 13, 2012, Issue 51 Volume 9

Illustration: Anand Naorem

WALMART’S DISCLOSURE on the fees it paid to lobby for opening up the Indian market created an uninformed and noisy debate in Parliament. The notion that allowing Foreign Direct Investment (FDI) in multi-brand retail would be the only stumbling block for Walmart’s entry into India quickly evaporated as proceeding in both Houses were disrupted for two straight days because of this disclosure report. As the time of its entry into India gathers pace, any piece of news to do with the company is being greeted with protests.

Earlier this week, the multinational retail giant disclosed in a report to the US Senate that it spent $25 million over the past three years on lobbying, including on issues related to “enhanced market access for investment in India”. Opposition members picked on this number and stalled Parliament, claiming lobbying was illegal and accused the government of taking “bribes” for pushing Walmart’s entry into India. BJP members demanded a probe into the matter. To the surprise of many, the government agreed to an inquiry into Walmart’s lobbying practices.

“This disclosure has nothing to do with political or governmental contacts with Indian officials,” says a Bharti-Walmart spokesperson. “It shows that our business interest in India was discussed with US government officials along with 50 or more other topics during a three-month period. Naturally, our Washington office had discussions with the US government officials about a range of trade and investment issues that impact our businesses in that country and worldwide, and disclosed this in accordance with the law.”

A look at the facts will help us understand better the legality of lobbying. For a start, though it is true that Walmart did pay lobbying firms to push for retail reforms in India, it is also true that it voluntarily disclosed this information. In America, lobbying is a valid practice, a right protected under the US constitution. Therefore, to say that lobbying equals bribery is an outlandish assumption. Just because there are no laws in India regulating lobbying to influence policymakers does not make it illegal. You have laws to make an act illegal, not having a law doesn’t make it otherwise. It is wrong to say Walmart bribed its way into India when there are no facts to prove so, although it may be the right time to address long pending issues around disclosures and lobbying in the country.

How should industry or individuals in a democracy try and convince policymakers of a particular position if not by lobbying? Unlike in the US, where the constitution allows it, we, in India, are running away from lobbying. We cannot expect transparency unless we have a right to approach our elected officials on any issue, in a manner similar to groups such as the CII and FICCI, who work with the government on behalf of corporate India, and with the rest of the world on behalf of India. In the US, such groups would have to register as lobbyists.

“Lobbying is often viewed with suspicion since it is confused with fixing,” says Sunil Kant Munjal, Joint MD, Hero Corp. “If it is in the form of advocacy to wean others to your point of view, it is absolutely fine and is an accepted practice worldwide and in India.”

Walmart has been the mascot of the battle between the UPA and its political opponents, who have been anti-reform in retail, their argument being it will hurt small traders and farmers. There is no doubt that the rollout of FDI will be complex and tedious and this latest controversy is a part of it. But what is also clear is that Walmart will need to rethink how it plans to make the most of India’s push for reforms amidst growing hatred for its brand. For the BJP to translate lobbying into bribery is misleading. What they should highlight is Walmart’s investigation of its Indian officials under the US Foreign Corrupt Practices Act (FCPA). They are more likely to find some ammunition there. Instead, they are confusing the two issues.

The company has undertaken a detailed investigation of its own arm in India with regard to internal bribery charges under the FCPA. It has sacked five employees in India, including CFO Pankaj Madan, following the inquiry, and Walmart India CEO & MD Raj Jain — who has just returned from the United States — is under severe pressure to sort out the mess.

The lobbying fee disclosure is not connected to this case at all but with all the wounds suddenly open, anti big box retail segments are making use of every opportunity to show how the entry of Walmart will be detrimental to India’s economy. It, of course, helps to remember that retail is not just Walmart or vice-versa.

Says Ronen Sen, former Indian Ambassador to the United States: “Anywhere you have democratic institutions, this is a registered way of doing things.” Sen further says that Indians have for long engaged in lobbying to push their case.

Unfortunately, in India, lobbying as a term is still associated with Niira Radia and the 2G spectrum scam, acts to be scoffed at, proofs of the unsavoury business- politics nexus. But the truth is, lobbying is undefined, vague and controversial because we have never considered a framework for it or its scope, albeit it has existed in every sphere — corporate, government, NGOs and more. And not one party can be exempted from indulging in it.

Often lauded for his business-friendly ways, Gujarat Chief Minister Narendra Modi reportedly hired Apco Worldwide, a public affairs firm, to boost his image internationally. Apco today boasts of a client list that includes names such as former Indian ambassador to the US Lalit Mansingh, US ambassador to India Tim Roemer and many more.

The UPA had also paid a US firm to lobby for the Indo-US civilian nuclear deal. As reported by the Daily Mail in November 2012, Washington-based Barbour Griffith & Rogers (BGR) was hired by the Indian embassy to seek media interviews for Prime Minister Manmohan Singh and get Congressional resolutions passed in his support ahead of a US visit.

“What is being said reveals ignorance,” says Sen who was instrumental in the Indo-US nuclear deal. “As India’s ambassador, I have actively engaged in lobbying, wherever it was. For example, when the erstwhile Soviet Union broke up, we had to lobby for a certain point of view to influence opinion. Even during legislations, as foreign envoy, I would get into the language of the legislation and lobby to get it changed with our trade, economic and security agenda in mind.”

INDIAN TECH companies routinely hire lobbying firms to get improved visa rules passed. Reliance, Tata and Nasscom have all used the services of global firms to get a foot in the door in other markets or appointments with governments.

Does an Indian citizen have any basis for seeking answers from those who receive funds? As a nation, we do not believe in disclosure of campaign finance, lobbying funds or even any gifts received by those in office. As a result, our political class gets uncomfortable whenever there is talk of disclosing information voluntarily. Why would any politician or entity disclose that they accepted any money when no such rule makes it incumbent on them to do so?

What this debate has once again exposed is our discomfort with transparency where all institutions — government, corporations or the bureaucracy — will have to deal with an open system of discussion, debate and decision. The government should take this opportunity to seek a basic framework to recognise lobbying as a legitimate industry, which should be given due importance when policies are drafted. At the same time, we need to recognise that excessive influence of money like in the US is not desirable and hence, the need for a set of rules.

We would also do well to acknowledge that lobbyists are professionals, who possess special skills of persuasion and tact to make a point of view acceptable to those who did not approve it. So that we understand that when Walmart spends $25 million on lobbying, it is because it used the best professional help it could to achieve its objectives. Calling it a bribe is not only irresponsible, but also defamatory.

Lok Satta is a political party in India founded by Dr. Jayaprakash Narayan It was launched on October 2, 2006 by the Lok Satta Movement. From 1996 to 2006, the Lok Satta Movement fought for administrative and political reforms, including constitutional amendments regarding elimination of defections, reduction in the size of the cabinet, the Right to Information Act (RTI), disclosure of criminal records and assets by all candidates and others

In recent past, two articles appeared in “Andhra Jyothi” by Dr. Jayaprakash Narayan (or JP as he is known), the chief of Loksatta Party. These were two part articles that talked about two major issues, failure of governments to protect the interests of farmers and the need to bring in access to foreign / export markets for the farmers and also the know how in post-harvest technologies. His as well as his “farmers group” leader Mr. Chengal Reddy’s argument is that farmers are unable to access export markets and are losing out on making big profits as they don’t have the necessary infrastructure – like cold storages, post harvest technologies etc.

Their view point is that by inviting FDI in retail it shall be a win-win situation for the farmers of India as they will have access to good storage facilities, infrastructure for post harvest technologies, processing industry and finally have greater access to export markets. In one television debate on DD some days ago, Mr. Chengal Reddy says, “Now “we farmers”, have huge stocks lying idle in the godowns, if we get FDI we will have access to cold storages and export markets and we will be able to sell at a better price. Therefore, “we farmers” are inviting FDI. See, you have allowed competition in TV and have so many channels as opposed to DD, and then due to private enterprise we have so many varieties of gadgets, why do you deny the farmer to have access to a variety of traders?” It is another matter that this spokesperson of “farmers”, has given up on agriculture as a profession a long time ago. When questioned as to why this huge produce lying idle can’t be made affordable / accessible to the millions that die of hunger everyday, which will solve the issue of the farmers and the poor, he had no response.

And the other champion of farmers Dr. JP somehow never talks about the other issues that are plaguing the farmers of this country. For example, it’s a well known fact that climate change has become the greatest enemy of agriculturists. And one of the major arguments is that there is a need for reduction in energy usage for restoring stability in the environment. And it is precisely for this reason and also for the reason that the pollution and radiation from Thermal power projects adversely impacts agricultural production besides hugely increasing local temperatures that we (NAPM) have been arguing against these projects. However, Dr.JP has critiqued our stand in a public meeting in Naguluppalapadu mandal in Prakasam district, in Aug.2010, where the local people had been campaigning against a thermal power project being set up there. His stand was that setting up a Thermal plant in that area was not good as it was an agriculturally productive area with good irrigation from the Lift Irrigation project that he was instrumental in setting up, when he was a collector. But then, he added that while setting up thermal plants in that area should not be allowed, our opposing thermal plants all over is foolish. And asked that if we oppose Thermal Projects everywhere, then where should one establish these industries? “In the sky?”

Dr. JP was addressing a public meeting in a constituency where he was an erstwhile collector. But if his concern for farmers is so strong then why is it that he doesn’t speak of the farmers who are losing their agricultural produce due to the pollution of NTPC in Parawada, another project that he was instrumental in establishing? When he is questioned on this, he says that it’s the fault of the NTPC which is not controlling the pollution. But then, as he has claimed to champion the cause of the farmers, why has he not campaigned/ protested on the issues of the pollution that is destroying the lives of people in Parawada? Why has he not taken up the cause of the farmers of Nellore, who are going to suffer total destruction due to the cumulative impact of 35,000 MW of thermal power projects? By his own definition, thermal plants should not be established in fertile agricultural areas. Therefore, these projects should not be set up in Nellore district which too is a rich agricultural, productive zone as also most of the coastal areas, where thermal plants by the dozens are being established. Why oppose in Prakasam and not talk about it elsewhere? What are the dynamics that are preventing his taking a stand on this issue? Forget about the pollution, in most places farmers have to fight to save their lands from Land acquisition, for SEZs, mining projects and various other industries. And this is no small number, why has he been silent on this issue? In fact, his take on SEZs is that farmers lands have to be consolidated in the SEZs and out of the developmental profits, farmers should be given a share! Seems fine to hear, but who will ensure that it is followed inside these “deemed foreign territories” where the Indian Constitution has not teeth? And what if the farmers don’t wish to give away their lands? What about the state repression regarding the various projects and the land acquisition process? Without referring to any of these, he has presented a beautiful, idyllic picture of Indian agricultural conditions, with “large areas of cultivable land, plenty of sun light, and good rainfall” etc, which goes to show that either he is not living in reality or simply trying to brush the truths under a carpet. In the past years what we had was erratic climate, and not good rainfall – it was either less or excess. But if he accepts these, then he has to come into the climate debate and then has to defend his stand on thermal power projects. Of course, he has a solution for climate change which he mentioned in a Kisan Swaraj Yatra meeting held in Hyderabad on 8thNovember 2010: “Indian agriculture contributes hugely to global warming, because the dung of our cattle emits methane. To over come this we have a solution. The gene in the stomach of Kangaroos controls this aspect. That is why the dung of kangaroos doesn’t emit methane. So, if we can use this gene and genetically modify our cattle so that their dung doesn’t emit methane, it would be a win-win situation”. He mentioned this in support of his argument that GM technology is “Oh! so good for us!”

Dr.J.P’s articles in Andhra Jyothi sound very concerned for the farmers and seem to be providing pragmatic and practical solutions, but look beneath the surface and his idea is to promote FDI in retail and leave the farmers to the mercy of private investors. True, the government mechanisms have failed to deliver to the farmers – a proper system of input supply and robust marketing support. True also that the entire government machinery is rife with corruption, but will this be solved by the entry of foreign / retail players? Are they holier than the government agencies? Have we not seen in the recent past post liberalization, the kind of corruption that ran into lakhs of crores of rupees which involved major corporate bigwigs in this country? Have we not seen how the US government involved itself in the way the then Petroleum Minister Manishankar Iyer was removed from his ministry? And the way Reliance played its role in the ousting of Jaipal Reddy just a few weeks ago? Are we not seeing how big corporations are arm twisting governments to suit their demands? In this context, assuming that Big Retail chains armed with their colossal money bags who have ruined small traders and small farmers with their predatory practices elsewhere, and who are instrumental in the framing of policies not just in the US but also in other countries, would work in the interest of small farmers; is either naïve or deliberate. Knowing that Dr.JP is an intelligent person, his solution of bringing in big retail into the country and to remove all protection in trading commodities, seems more like a deliberate act to promote the interests of big corporations rather than a real concern for the farmers.

In the same vein he champions that farmers elsewhere have benefited from GM seeds, but the farmers in India are being deprived of this benefit, due to unscientific claims by activists. In his third article, he claims that India has benefited hugely by using Bt Seeds. And that pesticide usage has reduced very much and thus protected the environment. (Which itself is not true, because there has been an increase in various other pests which were hitherto dormant, after the use of bt cotton targeted for Bollworm. In many places the bt cotton was not effective even on the Bollworm). He also claims that people have been feeding animals on cotton crops and that they have been using cotton seed oil and their health has been perfect and this has been proven ‘world over”. And he says the way forward is to promote GM technology in India. In his article while he talks about the farmers suicides pre-bt cotton, he doesn’t speak of the continuing suicides of farmers, especially cotton farmers, post Bt Cotton. Has he not seen the reports that it was Bt Cotton that has resulted in the increasing number of farmers suicides? Or the reports of the AP Animal Husbandry Department which has linked the death of animals to grazing on bt cotton fields? Or the fact that farm labourers end up with rashes on their skin and faces when they are working in the Bt Cotton fields? He and his dear friend Mr. Chengal Reddy claim that there have been no adverse effects on people consuming GM food and cotton seed oil (in Indian Context). I had asked this question earlier to Mr. Chengal Reddy and I am asking this question now to JP, “Have they done any epidemiological studies in India, regarding the consumption of GM food?” On what basis are they saying that there have been no harmful effects? There have been studies conducted in many universities abroad, and it has been found that there have been harmful effects on health including damage of internal organs and in a recent study that was done on rats over a span of 2 years, it was found that regular consumption GM food was even causing cancer. Like nuclear radiation the impacts of this technology on health may not happen over night, but it takes time for its effects to show up.

But whatever may be the facts, people like Dr. JP conveniently overlook these facts. The way he overlooks the fact that while the production of the grains due to green revolution may have increased, but the impacts on the soil and people’s health has been enormous. Also the increase in the cost of inputs, the use of chemicals has consistently increased over a period of time resulting in catastrophic effects on human health. Has he ever heard of the “Cancer Express” that takes cancer patients from the “hub of green revolution” Punjab, to a free cancer hospital in Rajasthan? While talking high about Norman Borlaug’s Green Revolution it would have been good if he considered these facts also. But Dr.JP conveniently keeps these facts out and paints a rosy picture about green revolution the way he now does about GM technology. I want to ask whether he eats GM food daily or does he eat organic food? I want to also suggest him to be on a special diet of GM food for the next two years and if after that he still wants to claim that this is absolutely safe, and then we will look into the matter. But for now, we rather trust the various scientists who have been cautioning people about the harmful effects of GMO’s.

Talking about the issue of monopoly by seed companies, he says, that we should not say no to this brilliant new technology, just out of fear of monopoly by MNCs. He says we are confusing the two things. But the real reason why the seed companies have brought in GM seeds and GM organisms is to Control the entire “food market and seed market of the world”. He suggests that in order to contain the seed companies, we should put in place control mechanisms that will ensure that farmers are provided seeds at reasonable rates while the “seed producers” get fair remuneration. Citing the example of how Loksatta fought to get the seed prices reduced in 2006, he says we should be doing similar things but not say no to the Technology. It took 3 years for the decision to reduce the prices to come about in 2009. What happened to farmers in these 3 years? Should then the farmers who are victims of these companies continuously run after courts to do this? Or will he (JP) be able to fight the cases of all the farmers in the entire country? For surely farmers don’t have either the time or the means to be running after courts for fair trade practices or compensations. On patents, he says we should amend our law in order to control the monopoly practices of the seed companies. I wish to ask if Dr.JP will he demand for scrapping the Patents on living organisms? Because it is the patents on seeds and living organisms that is encouraging companies like Monsanto to control seed markets. However, he specifies no clarity on this matter.

He seems to overlook the fact that once the seed is contaminated with a GMO then the farmer has lost his choice to use the seed that he wants to use. Further, he will be forever paying to the company for the use of the seeds, because almost every other seed would be contaminated by the patented gene and thus the companies claim royalties. He also seems to forget that once the biological contamination happens we cannot call it back from the ecosystem. Nor can it be controlled by putting up borders – wind, insects, birds – none of these know the physical borders or the buffer zones! They would go for hundreds of kilometers taking the contaminated pollen, contaminating the fields of unsuspecting farmers, as happened with Bt cotton in India, GM Canola in Canada, GM maize in Mexico to cite a few examples. Dr. JP seems to be unaware of the fact that companies like Monsanto slapped multi million dollar cases against ordinary farmers in North America, claiming that they have used Monsanto’s seeds without the company’s permission; while their only fault was that the pollen from their neighbouring farmers fields’ contaminated their crops due to the wind. Or that there is a big movement across the US demanding for GM Labelling, as it has been proven to cause various diseases. And consumers now feel cheated and want to know what they are eating.

Saying that GM technology and Big Retail helps farmers’ interests is the most vulgar lie ever told! In this country, farmers who have been left high and dry at the mercy of fluctuating international prices and who have been made dependent upon the private fertilizer, pesticide and seed companies, are committing suicides in thousands of numbers and the situation will only get even worse with the entry of both Big retail and GM seeds in other crops. The hitherto self-reliant farmer has been turned into a beggar by making him/her dependant on these companies. While in earlier times the demand and supply was based on local demands, now the farmers have to contest with the rapid changes in international markets. The problems started more because of this opening up of markets which has brought in cheap imports. It is thus, the commercial crop farmers like tobacco, cotton and other such crops, who are directly dependent on the “commodity trading international markets”, are the ones who commit suicides. Those who grow food crops meant for the local consumption in their nearby towns and villages are the ones who are in a better situation. Instead of asking for FDI in retail would Dr.JP demand for a ban on futures trading in commodities?

Farming and small trading / retail have been the largest private enterprise in this country and also the largest employment generating occupations of this country. But these are not seen as such and have no access to the kind of “red carpet” facilities including access to land and credit which an ITC or a Walmart would receive. While farmers have to run around for loan waivers and compensations from pillar to post, big time defaulters like big corporations are given waivers to the tune of hundreds of crores of rupees. Small landless poor have to struggle for decades to get access to some land, and governments don’t have land to give to farmers’ markets, but big retailers like Reliance and Walmart will be given access to land of their choice and given all facilities – even if it means to oust the existing farmers. Why doesn’t Dr. JP talk of this?

What our farmers need is access to credit, allowing them to use their own wisdom and making them more and more self-reliant. We need not go any further than see the experience of Gujarat where the farmer’s co-operatives own everything from godowns to fertilizer companies (Kribhco). And for a change I saw farmers with as little land as 5 acres being prosperous, because they fight with their collective strength and also have the protection of their collective wisdom. Promoting local procurement for local Public Distribution System managed by community groups was successfully demonstrated in Medak District. Also successful was the Dairy co-operative of Mulkanoor in Karimnagar, run by women’s groups. This protects not only the farmer but also the consumer. However, people like Dr. MMS and Dr. JP will always feel that our people are incapable of solving their own problems. They always feel the need to beg foreigners to lift us out of our misery. And we have seen where this begging and dependency on “foreign wisdom” has led us to. The need of the day is to strengthen the local communities – farmers’ co-operatives and farmers markets where the farmers can sell their produce directly to consumers and it is the real solution to remove middle men. And Big retail is nothing more than that – A big middleman.

At present, the farmer at least has the choice of either selling in his own village, town or to a wholesaler or retailer. When once these big retail chains come in with their big money, small traders will be wiped out and the farmer will have only one choice – to sell to these hegemonic powers. In many situations too, small farmers sell their produce directly also. Will these people be able to compete with the low prices of big chain stores? Dr. JP and Mr. Chengal Reddy feel that as we need cold storages and infrastructure facilities, we need to bring in big money. But my question is why can’t these infrastructures be built by the government agencies and give the management responsibilities to local communities or at least give them the right to question any kind of mal-functioning? Where is the guarantee that these private owned cold storage and other such infrastructures be easily accessible to farmers? Like the Toll Gates that have now made ordinary travel from one district to another exorbitantly high and like the private health care and private education, wherein, all the public utilities have become exorbitantly out of reach of the common person, these infrastructures too will not be open to farmers unless they pay through their nose or become a part of the contract farming system and live according to the dictates of these companies.

All this is assuming that these retail chains in true spirit buy the produce from our farmers. In one of its clauses the FDI Decision says the companies are obliged to source only 30% of the produce from local farmers. And that it will be under self-monitoring system. Who will check these guys whether they are purchasing that 30% at least? The corrupt govt. officials who can easily be bribed? And what about the rest of the 70%, that could easily be a way for cheap imports from other countries? In that case what happens to the 70% produce of our farmers here? We have seen what has happened to small industry and weavers across the country, due to cheap imports and products by highly subsidized big industry. Now it’s the turn of the farmers and small traders. As I write this article the decision on FDI has already been made. Only time shall tell us what is in store for us. And how far will Dr.JP ensure that fair practices are enforced in this country!

But one thing has become clear: it is easier to deal with loud, uncultured, corrupt politicians for we know what they are. The soft spoken, seemingly people-friendly and “intellectual” politicians who hide their true intentions behind the façade of honesty are the real danger, due to their capacity to influence the educated classes’ perceptions by their seemingly authentic arguments. We have already seen what happened to this country for having trusted one such predecessor – Dr. Manmohan Singh (Dr.MMS)!

In the FDI debate that happened in the Lok Sabha, a particularly painful moment saw ‘Netaji’ Mulayam Singh Yadav take the name of Ram Manohar Lohia. He talked about Lohia and Gandhi. Even as he made tired statements to the effect that he opposed FDI in multi-brand retail in principle, it was getting amply clear to everyone that he and his party would walk out when the moment of truth came in the form of voting. Paralysis and hypocrisy are two conditions where one’s action is not in line with publicly-expressed wish. At any rate, they are not among the desirable characteristics of ‘people’s representatives.’ Some old Samajwadis in his contingent might have wanted to defect and vote their conscience to avoid the ignominy of being associated with either of the two conditions. But that would effectively end the parliamentary career of such people. So they followed their ‘Netaji’ out of the house. Avoidance of trouble is preferable to happiness. The Anti-Defection law drawn up by party bosses have ensured that no Samajwadi Party member of parliament or for that matter, any member of parliament of any party cannot vote in accordance with what he/she deems right. One has to slavishly follow the party diktat or lose the their membership of the parliament, unless at least a third of the MPs of a party find their spine.

It may not be a totally idle exercise to think how the FDI vote would have turned out if the anti-defections law was not in place, given the murmurs of discontent that exist even within the Indira Congress. The anti-defection law is supposedly a counter against horse-trading. In the period from 1985 to 2009, only 19 members of parliament have been disqualified for violating the party whip. The party leaderships don’t have faith on people winning on their ticket, partly because they know on what flimsy self-serving ground such an assemblage of champions is created in the first place. The leaderships also know that enticements of greater value may sway legislators — irrespective of the publicly stated reason of coming together as party – Gandhian socialism, Indian nationalism, Hindutva, OBC rights or whatever. At a deeper level, these are signs of crisis in the very nature of the political class — namely, the absence of inner party democracy and ideology based politics. That crisis has only deepened. Hence the need of the anti-defection law to make parliamentarians falls in line with high command dictates. This form of quasi-Stalinist centralism somehow has a long afterlife in those nations (India, Bangladesh, Kenya) where freedom of expression is also under constant threat from the government of the day. I have a feeling that it is not accidental. UK, France, Canada, Germany and USA have no such anti-defection law for their legislators.

It is important to understand what a member of parliament represents. One is not simply a ‘proxy’ for the people but a representative of the changing wishes of the people of one’s constituency. That is to say, things change and so do people’s wishes, above and beyond the programme of the party on whose ticket one was elected. Party programme cannot be the sole guide if parliamentary democracy is to be a living entity. In a first past the post system, many MPs do not win by majority but by plurality. Parties command all the representative abilities of a MP by issuing whips. This is when democracy takes a beating at the hand of partycracy.

Parties are important tools of organising opinion and force multiplication, especially across larger geographical spaces. Do people vote for a party or a candidate or both? The answer is variable. Candidates use parties and parties in turn use candidates. The Mohammedan MPs of the BJP are a fine example of this symbiotic relationship. In some cases, parties change candidates and win. In other cases, some people win, irrespective of their party affiliation at the time. Clearly parties are not the last word in a democracy. The individual representatives matter too.

In the presence ofparty-whips, voting records of individual MPs are a monotonous copy of party stances, or worse still a continuous testimony to the nature of cynical machinations that the party-head has executed. The anti-defection laws were purportedly drawn up to avoid Matsyanyay — the condition where the big fish eat the small fish. It has resulted in a system where even the minimally conscientious fish is too scared to make its opinion known by voting one’s own opinion. The anti-defection law does not penalise anyone, even the leadership, when it deviates from stated party programme. With the rise and rise of parties that have dynastic or persona-based leaderships, a different Matsyanyay is at play. Only the top fish needs to be ‘managed.’ The top issues the whip and the rest of the shoal falls in line. This surely cannot be a good sign for an aspiring democracy representing such variegated shades as the subcontinent. The anti-defection law only solidifies the false majorities of parties in a first past the post system.

FDI in retail is an example of deregulation, devoid of any safety net for its after-effects. Would the government consider the Parliament Committee report or treat Parliament with disdain?

Here is a simplified explanation, sans economic jargon, to help understand FDI (foreign direct investment) in retail and what it has in store for the aam aadmi—“The Mango Man”. Let us start with an analogy.When a falling stone hits the ground its energy is converted and dissipated as heat. However, if the same stone lying on the ground is heated, it does not take off. What is the relevance of the falling stone to FDI in retail?

What is FDI in retail? It means “Foreign Direct Investment” of 51%, a controlling stake is permitted to any foreign company to set up retail trade in India. Simply put, a number of foreign-owned supermarkets would sprout all over the country. At a political party rally in Delhi, the leaders extolled the virtues of FDI in retail as symbolic of the party’s reforms agenda. The phrase, “economic reform” has many different meanings depending on ideological and political leanings.

One view is that between 1875 and 1975 it meant more government and since then it means less government intervention or free run for market forces. A Wall Street view says that it means, “Change for the better as a result of correcting (economic) abuses”. “Better for whom?” and “whose abuses would the reforms correct?” Did the post 1975-reforms in USA correct the abuses by financial wizards that led to the 2007–08 meltdown? A third view holds that economic reform refers to policies directed to achieve improvements in economic efficiency. Which of these did the rally leaders have in mind when they toasted the FDI reform push?

Those in favour of FDI in retail painted rosy pictures of benefits such as better prices for farmers, more jobs, better shopping experience and so forth. Those against it predicted the opposite. Few had hard facts to back their arguments. It is strange that neither the government nor the opposition referred to the report of the Parliament Committee which examined FDI in retail. The Committee seems to have done a comprehensive study, examining a number of witnesses, individuals, NGOs and trade bodies, travelling around the country, studying reports and experiences of other nations and asking questions of government departments. The Committee concluded that more people would lose jobs that the number that would find work. They said that FDI in retail would destroy large numbers of small and marginal farmers. They cautioned against the probable monopolistic behaviour, predatory pricing and attendant consequences. The Committee found that unorganized retail provides livelihoods for 40 million people, that is, for about 8% of the country’s workforce. Referring to the projection of FDI in retail creating 2 million jobs, the Committee said that this was exaggerated and that this ignores 200 million people who depended on retail trade for a living. The Committee was not only critical of FDI in retail, but also of any large corporate in retail business. The Committee drew a dismal picture of the effect of FDI in retail on the “Mango Man”.

With FDI in retail, shops like this will disappear. How sad.

ICRIER (Indian Council for Research on International Economic Relations) carried out two studies, one in 2008 and the other in 2011. The 2011 study predicts a great shopping experience for consumers. ICRIER surveyed 300 consumers, in high and middle income groups. Evidently, the government relied on the ICRIER recommendations, rather than on the Parliament Committee report. Does the reliance on a private organisation’s recommendations in opposition to Parliament, have anything to do with the chairperson of ICRIER bearing the same surname as the Deputy Chairperson of the Planning Commission?

ICRIER’s sample of 300, from high and middle income brackets, for a population of 1.2 billion with over 40% poor, for recommending foreign investment, is questionable. In reply to a RTI (Right to Information) query on whether the government had done any study on FDI in retail, the commerce ministry replied that it had not done any such study. The reply referred to the ICRIER report and not the Parliament Committee report. The Committee’s report was not discussed in Parliament. Rejecting the Parliamentary panel study and accepting a private study report, does not augur well for Parliamentary democracy. ICRIER says consumerism promotes economic growth. The earlier study (2008) surveyed 2020 unorganized small retailers out of 6 million shops. None of the studies addressed the issue “why India requires FDI in retail?” Would it lead to a net increase in foreign currency earnings, improve India’s balance of trade? Stiglitz’s views on FDI in retail are significant. He asks, “Why India needs foreign entrepreneurs in any sector, particularly the retail?” He then talks of the power of Wal-Mart to drive down prices and suggests that they will use that power to have Chinese goods displace Indian goods. Next, he draws attention to Wal-Mart’s abusive labour practices. He asks, “Why would you want to import such practices into India?” Why indeed? The foreign retail lobby reportedly spent over Rs52 crore in India. Could that be the reason why? He also talked about increasing inequality that Indian reforms are ushering in, accompanied by corruption.

It is appropriate to now look at the falling stone analogy. To see the relevance of it look at two economic philosophies prevalent today. One is the “Trickle-down” variety. Subscribers to this believe in less and less of government. The market would correct itself. De-regulation is the key. Concessions to the rich would lead to investments and economic growth. This would trickle down to the poor. The second view holds that left to itself, unregulated market economies, would become so disorderly that the human costs would be enormous. FDI in retail is integral to “Trickle-down” economics. It is part of the reforms’ cry for deregulation.

No lessons have been learned from the deregulation induced meltdown. That is why the government and proponents of FDI in retail do not bother about its effect on 6 million small shop-owners or the 50% of the farming-dependent population who would lose their livelihoods. Some of these dispossessed may find jobs in the retail supermarkets, as shop assistants or labourers. Does deregulation help them? The stone does not take off when heated because heating causes disorder. The heat energy is random, disorderly; the stone’s molecules jostle each other randomly. Hence, they cannot lead to orderly motion of the stone. The natural propensity of things is to move towards chaos. Markets are no exception. Without regulation the result is disorder. FDI in retail is an example ofderegulation—thinking devoid of any safety net for its after-effects. Would the government consider the Parliament Committee report or treat Parliament with disdain?

FDI is a debt inflow or liability foreign exchange because the profits or returns it generates will have to be repatriated. Will FDI in retail, single brand, banking or insurance enhance our foreign exchange earning capacity? Do they bring technology to the economy?

There is so much of talk going around in all circles regarding FDI. Politicians, for obvious reasons, speak a language of their own, driven by ulterior motives. Most of the times, they are not even knowledgeable to understand the long term consequences of the populist measures and policies they adopt. It would be in the fitness of things if the whole thing is explained in simple and elementary terms.

Now, the question arises why FDI. The need for FDI is justified only in two situations – (1) when DDI is inadequate or (2) when foreign exchange is required. On the DDI front, the position as obtained in our country is fairly sound. Banks are flush with funds; the domestic savings rate is one of the highest in the world; market capitalisation, constantly on the rise, makes available investible funds; and DFIs have huge unutilised funds waiting to be deployed in feasible projects. It is gung-ho all around. Therefore, domestically speaking, there is no shortfall of funds for investment.

As for foreign exchange, it is either an asset or liability, depending upon its repatriability. If it is repatriable (i.e., to be returned or repaid in the form of foreign exchange itself), it is a liability. If not, it is an asset. This way, only three sources of foreign exchange – (1) exports of goods and services, (2) NRO accounts in banks and (3) Foreign Aid — qualify as assets. The rest are liabilities like FCNR & NRE deposits of NRIs; FDIs; FIIs and foreign exchange loans from foreign governments and agencies. For convenience, let’s call one asset foreign exchange and the other liability foreign exchange. Some people choose to call them non-debt and debt inflows respectively.

FDI is a debt inflow or liability foreign exchange. Why? Simple, because the profits or returns it generates will have to be repatriated in foreign exchange. Secondly, all the men, material and merchandise imported in the years to come will have to be paid in foreign exchange. Finally, at the time of winding up/selling off, the proceeds will flow out of the country in foreign exchange. And, it is noteworthy here, all this will end up in the outflow of foreign exchange, many times more than the initial inflow. So, every FDI is a clear-cut case of liability foreign exchange.

All the above is about the supply-side of foreign exchange. Now, let’s examine the demand side. The question is – why is foreign exchange needed at all? Based on long-term benefits to the economy, the demand for it can be classified into consumption and construction. Consumption demand is the demand for foreign exchange to import consumption items like gold, oil, tourism and FMCG — all those areas where funds are just blown. On the contrary, ‘construction’ stands for all those areas which promote exports, substitute imports, strengthen the infrastructure of the country and make it more competitive globally.

So, we have the demand for foreign exchange classified into two and its supply also into two. This can be neatly depicted graphically in a Foreign Exchange Desirability Matrix.

The table makes it amply clear that Asset Foreign Exchange casts no negative impact on the economy, regardless of whether it is used for construction or consumption purposes. However, liability foreign exchange needs to be restricted to ‘construction’ purposes, as the consequences of putting it to consumption needs are grave.

Now, why should we go in for liability foreign exchange, like FDI, at all, if it is not for any export promotion, import substitution or any capacity construction purpose? Well, if we indulge in the luxury of blowing liability foreign exchange on non-developmental consumption items, we’ll end up worsening our foreign exchange debt position (we are already in the doldrums with mounting pressure on our capital account of balance of payments, owing to increasing deficits in our balance of trade account year by year).

In fact, until we have any project/avenue in hand which will, in times to come, yield foreign exchange more than its repayment schedule warrants, the inflow of liability foreign exchange should be outrightly avoided.

The service sector is comprised of marketing (wholesale and retail), banking, insurance, civil aviation, education, tourism, medical & health, telecommunication and software, etc. All these fall either in the construction category like education, medical and health, telecommunication and Software or consumption like marketing, insurance, banking and tourism.

Incidentally, in marketing, there is nothing like technology. It’s all about consumption, where the sole elements are Brand and Supply Chain Management; again nothing basic or infrastructural or technology enhancing. Further, the question arises — will FDI in sectors like retail, single brand, banking or insurance enhance our foreign exchange earning capacity? A big NO. Do they bring technology to the economy? Again, a big NO. Hence, FDI in ‘consumption’ sectors deserves to be outrightly rejected. If it is not, it would simply mean the government is not working in the interest of the economy, but is unscrupulously catering to vested interests.

Importing technology

They say, had FDI not come in, our automobile, telecommunication, aviation, banking and many other industries would not have reached global standards. I would say that instead of allowing foreign capital to set up shop here, the country should have used foreign exchange to just import technology, if needed; and set up the same industries with domestic capital. No liability foreign exchange; no profits going out of the country; domestic consumers getting the same products; and the fruits of exports being reaped by domestic firms and not foreign — all the way a win-win situation for us.

But, being blind to the undercurrents, we instead allowed foreign firms to set up bases here, milk the domestic market and carry back huge profits. The foreign exchange that flowed in by way of FDI was blown in consumption areas like gold and oil.

In the ensuing debate, lots of comparisons are being made with the U.S., the U.K., China and Japan. The question is: are we at the same level of development to indulge in the luxury of comparing ourselves with them?

With no apparent gain for the economy in the long-run on the table, there cannot be a more foolish act for any country than inviting foreigners to set up shop on its own territory. First, it is a clear signal of allowing them to reap profits here and take them back. Second, it is telling the world, loud and clear, that we, by ourselves, are incompetent and inefficient. If a foreign entity pushes for entry in the economy, it will still make sense. It wants to expand its market and reap profits. But what is the compulsion for a host country to insist that a foreign entity come and set up shop here?

Historically, no economy has ever developed on foreign capital. In the industrial revolutions of various nations, the crucial factors that have been instrumental are (1) indigenous mobilisation of resources, (2) domestic technological development and application (3) strategic management and (4) support from the governments, mostly to ward off external pressures. Cases of foreign investment are few and far between.

Let us keep in mind that foreign exchange is both a boon and bane, to determine which each of its inflow needs to be individually assessed for its costs and benefits, before allowing it.

(Professor Anupam Bhargava, a PhD in Management, is a former AGM of SBI. He is now Adviser and Research Guide at Rajasthan Vidyapeeth (Deemed University), Udaipur. Email: anupambhargava58@gmail.com)

New Delhi, Dec 4 (IANS) Seven speakers from different parties spoke Tuesday on the FDI issue in the Lok Sabha, kicking off a two-day debate with voting.

The debate will end Wednesday with a vote. If it loses in the voting, the UPA government need not resign but it will certainly be a huge embarrassment.

Here are some quotes :

Sushma Swaraj (BJP, Leader of Opposition in Lok Sabha) : “Small shops, retailers have been wiped out in countries which allowed FDI in retail. About 12 crore people will go out of jobs in India due to the UPA government’s decision to allow FDI in retail. PM makes bold statements like if we must go down, we’ll go down fighting. You must Mr PM, but fight for the poor, not the rich, fight for country, not multi-nationals, fight for small, not big.”

Kapil Sibal (Communications Minister) : “It was decided that retail will only be in cities with over 10 lakh population. There are 53 such cities. After that we felt some states have opposition government. If we separate the states that don’t want it, there are 18 cities left…So if FDI in retail will be implemented in only 18 cities, why is the debate happening? This debate is not needed at all, it is a totally political debate.”

Mulayam Singh Yadav (Samajwadi Party chief) : “As far as FDI is concerned, how much so ever you explain, it is not in favour of the country. We are speaking for the people, it is not in favour of the country. Thirty crore people will be unemployed. If this was good and beneficial, why is America in trouble? Why are people unemployed there?”

Dara Singh Chauhan (Bahujan Samaj Party): “Poor people are anxious over the impact this policy can have on their lives. They fear the multi-national companies will take away their livelihoods. The government should not rush with it.”

T.K.S. Elangovan (DMK) : “I am not telling this as an opponent, but telling this as your brother. I don’t want to put you (government) for a whole-body scan as opposition, but it (FDI in retail) is definitely not in interest of the trading community. “We were the first party to oppose FDI, but we don’t want to oppose you. We have done many good things for the country together, something may not be in favour of the country, but we don’t want to oppose you.”

Basudeb Acharia (Communist Party of India-Marxist): “The government is giving dreams of employment (from FDI).. There is 0.8 percent growth in employment in the country and unemployment is rising, there is an economic slowdown… If Wal-Mart gives one employment, it will snatch 17 employments.”

West Bengal Chief Minister Mamata Banerjee on Tuesday said she would not allow foreign direct investment (FDI) in multi-brand retailin the state.”They (union government) allowed FDI in retail, capped subsidised cooking gas and now they will invest pension money in the share market. By doing this, they want to ruin the country. They want to sell the country to foreigners,” Banerjee said at a public meeting in Tamluk in East Midnapore district.”They want to snatch your land and livelihood and set up Wal-mart here. But let me say this: ‘As long as I’m here, we will not allow Walmart to enter’. We cannot and will not allow anything that jeopardises the interest of common people,” Banerjee , the Trinamool Congress chief, said.

Banerjee came down heavily on the Congress-led United Progressive Alliance (UPA) government for the steep hikes in diesel and fertiliser prices and said the government would have to roll back the hikes.

Following the UPA government’s decision to allow FDI in multi-brand retail, her party had withdrawn support from the ruling coalition last month.

Earlier in the day, Banerjee inaugurated a PET resin plant of Dhunseri Petrochem & Tea Limited, an edible oil plant of JVL Agro and a logistic park of Apeejay Surrendra Group in Haldia.

Dhunseri plans to increase its PET resin production capacity to 4,10,000 tonnes per annum with the second plant, investing Rs.400 crore.

JVL Agro has set up the 1,200 tonnes per day capacity plant, pumping in Rs.165 crore, while investment for the first phase of logistic park of Apeejay Surrendra would be around Rs.100 crore.

Banerjee expressed unhappiness over the union government delaying environmental clearance for eco-tourism project in Nayachar in the district.

She sought immediate clearance for the project. She said the government was also blocking Haldia’s industrial expansion by imposing a ban on industries citing environmental issues.

“Once there was a proposal that there would be a petrochemical hub. Then the objection was there. Now we will be doing eco-tourism. I do not know why they have blocked it. If they do not clear the area for the tourism project, let us go for another area and not wait for anybody,” she told a gathering here.

“I do not want to wait for anybody. If you want to do a job, you do it immediately. We cannot wait,” she said.

Banerjee had opposed the chemical hub for environmental reasons during the previous left Front government. After coming to power in May 2011, she revived Nayachar’s industrial plan, and proposed an eco-tourism project instead of the petrochemical project.

But the eco-project too hit a roadblock with the Ministry of Environment and Forestsseeking certain clarifications from the state government since a thermal power plant was also proposed along with the project.